Mortgage Banker vs Mortgage Broker

Difference Between Mortgage Banker and Broker

While shopping for a home loan the prospective buyer may either get assisted by mortgage banker or broker, where both assist in preparing the right mortgage, however the mortgage banker works for lending institutions like banks etc, from whom the loan is obtained and the mortgage broker is an intermediary working with many of the financial institutions arranging the right mortgages between borrower and lender based on the individual needs and expectation of the borrower.

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Although both help procures the right mortgage for a homebuyer the basic difference lies in the fact that mortgage bankers represent a bank or other specific financial institution that lends money whereas the broker is not bound to any one lender or financial institution but is free to shop around for a mortgage based on the individual needs of the borrower.

In the course of this article, we would try to analyze some of the fundamental differences between banker and broker that might help a borrower make the right choice while seeking a home loan.

Mortgage Banker vs Broker Infographics

Let’s see the top differences between Mortgage Banker vs Broker.

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Key Differences

Mortgage Banker vs Broker Comparative Table

Basis for ComparisonMortgage BankerMortgage Broker
DefinitionAs per the Mortgage Bankers Association, a mortgage banker is “an individual, firm or corporation that originates, sells or services loans secured by mortgages.”The National Association of Mortgage Brokers defines a broker as “an independent real estate financing professional that specializes in the origination of mortgages.”
Level of FlexibilityEmployed by banks, credit unions or savings and loan associations, they offer a low level of flexibility by helping borrowers find the best possible of loan options provided “only” by that institution.Mortgage brokers understand the needs of borrowers to find the best possible loan option provided by any number of lending institutions, thus offering a higher level of flexibility in choice.
Level of ReliabilityA higher level of reliability working with a specialized lending institution.The relatively lower level of reliability working independently to spot the right mortgage opportunities.
How Do They Earn?Mortgage Bankers typically work on a salary with the lending institution, along with occasional performance-based bonuses or incentives.Mortgage brokers work for their commission or a flat fee in some cases, usually a percentage of the value of the loan.

Conclusion

Choosing from a mortgage banker vs broker while looking for a home loan requires careful consideration of individual needs. Whereas one can look for greater flexibility by going along with a broker who can compare the loan options provided by a credit union and a bank, for instance, a mortgage banker would offer greater reliability by working through every aspect of the mortgage process and loan packaging to render the best service possible.

If one must go along with a mortgage broker it should be someone who has passed the state licensing exams and is well aware of the rules of the financing. This would reduce the possibility of being charged exorbitantly by a broker or ending up with a less than desirable loan option which barely fulfills one’s needs.

Every aspect of the question must be carefully weighed to arrive at any conclusion and to avoid any possible issues with loan repayments at a later date.

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This has been a guide to Mortgage Banker vs Mortgage Broker. Here we discuss the top differences between a mortgage banker and broker along with infographics and comparative table. You may also have a look at the following articles –

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